I’ve had the pleasure of providing legal services to both large and small businesses for decades. Here I’ll explain some business documents that I believe are important for specific types of businesses.

Let’s Talk Trade Name – Statue says, and you may be surprised at this, that anyone operating a business in a name other than the true surname of the owner must file a verified statement in the county in which the business is to be conducted. Did you know? And if you don’t you could be charged with a simple misdemeanor. What is worse every day that goes by where you have not filed that statement is a separate and distinct offence. Ouch! This does not apply if your business is formed by a filing with the Secretary of State such as in a corporation, limited liability company, or a limited partnership.

That Buy/Sell Agreement – If your business is one that has multiple owners I suggest that you draft a simple agreement which says exactly what happens in the event of a owners death, termination of employment or (it happens) a business impasse. The Buy/Sell Agreement should also include what the price of the company might be. Pricing of a business for a Buy/Sell is more of an art than a science, but these agreements normally provide for an appraisal or the application of a formula to arrive at a price.

That Operating Agreement for an LLC – This could be titled “Who Does What” because without an operating agreement every member of a multiple owner LLC has an equal vote in the management of the company, each member has the right to enter into binding contracts and if/when it comes to the sale or merger of the company unanimous consent is necessary. Think about that for a moment. With an Operating Agreement management of the company has much more direction.

Got Minutes? – Minutes of what actions shareholders and directors of a multi-owner company take can be extremely important. Minutes of meetings memorialize the action of the company and provide authority for officers to act. There should be written minutes of the election of officers, authorization of action (particularly large purchases, borrowing money and entering into significant contracts), and sales or issuance of stock.

Thank you for reading and should you have any questions be sure to make contact with me.

Sam

Although each business has its own need for specific documents my goal here is to share with you certain business documents and types of documents that are important to businesses in general.

When it comes to doing business you need to remember to treat your business as a business and not a hobby. For that reason I suggest to our clients that, at a minimum you need to establish a separate checking account for your business. While that may seem like a “no brainer” you might be surprised at how many business people have failed to do so. Some of the benefits of a separate business checking account are that it:

• Helps segregate expenses and income for tax time;
• Helps in the overall recognition that you have a business entity;
• Helps in the overall management and budgeting of your business.

How about that Federal ID Number – By statute corporations and partnerships must get a Federal ID number because the business is a “taxpayer” and the business must file its own tax return. Although a sole proprietorship and/or a single owner LLC without employees does not require a Federal ID Number this does help establish the business on the IRS records.

Let’s Talk Contracts – One of the top causes for business lawsuits is the lack of clear and concise communication. Get it in writing. The agreement can be in the form of a contract or simply a purchase agreement but it must contain the names of the parties involved and what is to be provided by each party both on the seller and the buyer side. Oh, and what happens if there is a problem with the agreement? It’s wise to spell out the rights of each party involved.

Employees and Confidentially/Non-Compete Agreements – Many individuals believe, incorrectly, that confidentially and non-compete agreements are not valid. However, providing the terms are “reasonable” they are legally enforceable agreements. Courts balance the needs/rights of the employee. NOTE: the key word here is “reasonable”. If a Court does not think the terms are reasonable, it may “reform” the Agreement and enforce the Agreement as reformed.

In my next post I’ll help you better understand more about documents related to sole proprietorships including your Trade Name, what Multi-owner businesses should be concerned about from agreements to business minutes.

Thanks for reading and should you have a question please feel free to contact us here at the firm.

Sam

Very few people sell multiple numbers of businesses.  Accordingly, MOST businesses are sold by “first time” sellers.  The purpose of this article is to provide you some insight on the steps you should take in the course of selling your business.

• Self-Assessment
  • Are you in fact selling a business?
    • If you are the key employee and if you have all the contacts it is possible you are selling a JOB and not a business.
    • The hallmark attributes of a business (as distinguished from a job) are:
      • They maintain and follow established systems and procedures
      • They produce regular, reproducible results
      • Reoccurring clients/products
      • There are no indispensable employees (including YOU)
  • Why are you selling this business?
    • Unprofitable businesses rarely sell. Commonly they simply close.
    • Burn-out and retirement can be seen as an opportunity for a change on both leadership and ownership.
    • Looming industry changes can dissuade a buyer.
  • Who are the most likely buyers for the business?
    • An internal buyer (family member or key employee)
    • An external buyer (most often a competitor or someone in the industry seeking to enter the market)
  • Consider a pre-sale audit
    • Do a SWOT (strengths, weaknesses, opportunities and threats) assessment
    • Do an appraisal of the BUSINESS
    • Do an internal review of your legal infra-structure
      • Employment agreements with key employees including non-compete agreements
      • Agreements with key vendors
      • Lease agreements
      • Assignability of key contracts (including the foregoing)
    • Do an internal review of your “systems’ and procedures.
  • Identify “QUALIFIED” buyers
    • Qualifications of a buyer in a successful transaction include:
      • Experience with either the particular business or the industry in which the business is operating
      • MONEY
    • Business brokers exist and can perform a VALUABLE service (for which they intend to be paid)
      • NORMALLY the Seller (or the Seller’s business) pays the broker.
      • NORMALLY the broker represents the Seller
      • Brokers can sometimes provide industry insights due to specialization (example a broker who deals primarily with restaurants may have insight into the local restaurant market).
      • Brokers primarily provide potential Buyers with information given to them by Sellers. Brokers sometimes, but rarely, verify Seller information.
      • As with all professionals, some brokers/brokerage firms are better than others.
    • Selling a business which is subject to a franchise can be tricky.
      • Franchisors normally are permitted to withhold franchise rights if the buyer does not “qualify” as a franchisee.
      • “Qualification” can be based on experience or finance or both.
      • If a potential buyer would otherwise qualify as a franchisee they are a better candidate to buy the business.
  • Determine an “Asking Price” for the business
    • IT IS AS RARE AS A WINNING THE LOTTERY FOR A SELLER TO GET THEIR ASKING PRICE
    • An appraisal provides some indication of and independent assessment of the value of the business. These are as much art as they are science.
    • Sellers most often establish pricing based on:
      • How much they think they “need” to sell the business in order to:
        • Fund their retirement
        • Meet their subjective valuation of their efforts
      • ULTIMATELY, the BUYER determines the price of the business since they are the ones paying
    • Although no one wants to “leave money on the table,” it is important that the buyer is able to make a reasonable income.
    • The tax implications of the deal structure can influence the asking price
      • A Seller may take/get less for a stock sale v. an asset sale
      • Allocations of total consideration among non-compete agreement, consulting agreement, lease or other assets can influence the asking price
    • Assemble a team to assist you which should include:
      • Qualified business lawyer
      • Banker
      • CPA
  • Executing a Confidentiality Agreement
    • This is like dating- the parties begin to find things out about each other.
    • These are commonly signed before any information is given out about the Seller
    • While not a “standard” form, these agreements are generally all similar
    • After confidentiality agreement is signed the Buyer normally receives a significant amount of information about the Seller
  • Executing a Letter of intent
    • This is like going steady or dating exclusively- there is a significant interest in entering into the relationship.
    • It is normally non-binding (either party can still walk away from the transaction)
    • MANY transactions do NOT employ a letter of intent
    • This establishes the broad parameters of the transaction
      • Price- Normally 4 to 6 times 3year average adjusted taxable income
      • Terms of payment
      • Outlines, in broad terms, additional agreements (Seller consulting agreement; Seller non-compete; leases)
      • Outlines, in broad terms, contingencies to closing such as obtaining bank financing or franchisor approval
    • Be careful of broker provided documents. Sometimes these create a binding agreement before Buyer is ready to commit to the transaction
  • Due diligence (not really an isolated step)
    • This may commence upon the signing of the confidentiality agreement or may be deferred to the signing of the contract.
    • Due diligence refer to the Buyer’s investigation of the Seller and the confirmation of the information provided by the Seller. The investigation should be quite thorough and should include discussions with:
      • Key employees- and FORMER employees
      • Key customer/clients
      • Key vendors
      • Key industry individuals
    • Seller may restrict due diligence until there is a contract in place to avoid upsetting Seller’s employees, Seller’s customer/clients, and or Seller’s vendors/creditors
    • The due diligence investigation is- by far- the most important part of the transaction
    • Often the CPA firm of the Buyer takes the lead in conducting the due diligence
    • Regardless of when the due diligence period commences, Buyer should not close the transaction until they have fully satisfied itself with the results of the investigation and/or the future action Buyer may take as the result of the findings
    • Remember: past results may not reflect future performance
  • Executing a Contract
    • This is like the engagement of the parties to the transaction
    • This is the legally enforceable document which outlines ALL of the fine points of the deal
    • The contract will specify the terms of payment
      • Normally there is some nominal payment at the time of signing the contract for sale
      • About 75{7643a07be85def2dedbecc56bad3bab67e83a7c22b809f3c7a47a1fa73b8911c} of the total sales price gets paid at “closing”
      • About 25{7643a07be85def2dedbecc56bad3bab67e83a7c22b809f3c7a47a1fa73b8911c} of the total sales price gets paid in the form of a promissory note from the buyer
        • Terms and interest rate vary from deal to deal but 3-5 years is not uncommon
        • This loan is normally subordinated to other financing and therefore gets paid last. Hence it has the highest risk of non-payment
        • Because this often represents a significant portion of the “profit” on the transaction, it is important that it gets paid. Hence, the importance of having a qualified buyer will be able to conduct the business in a manner which will provide payment
    • The BULK of the document comes from the representations and warranties
      • These are the written memorialization of the assurances the parties give each other as part of the transaction.
      • These normally include statements as to:
        • Proper formation
        • No undisclosed liabilities
        • No pending legal actions (either governmental or private action)
        • Compliance with laws rules and regulations
        • Title to assets
        • Payment of taxes
        • Required approvals of the transaction
        • MANY other issues
      • Although Buyer checks into many of these matters as part of due diligence, Seller can be liable for representations and warranties which turn out to be untrue
  • There are often disclosure schedules attached to the contract which provide additional information. Example: a disclosure statement may supplement whether there are any outstanding contracts
  • There are often MANY revisions before a contract is finalized
  • The contract may establish post-closing obligations. These might include:
    • A covenant that the Seller not compete
    • An agreement that the Seller will help train the Buyer
    • A requirement that the Seller favorably introduce Buyer to customer/clients and vendors/creditors
    • A requirement that the Buyer provide the Seller with information about the business’ operations until the full purchase price is paid
    • Depending on the type of transaction
• Closing of the Transaction
  • This is BOTH the wedding (for the Buyer) and the divorce (for the Seller)
  • Takes place after all pre-conditions have been met and approvals have been obtained
  • This is when the “real” money changes hands, the transfer documents are signed and exchanged and the buyer takes control of the business
  • Most transaction “problems” come to light in 6-24 months following closing

Read more

If you buy a business, and there is no covenant to not compete, you may have financed a competitor who could steal your business away from you.

If you do not have key employees sign covenants to not compete, they could take your critical business information and/or key customers and vendors with them if they leave.

To prevent these lethal threats to your business, you should enter into covenants to not compete with any Seller of a business you buy, as well as with your key employees.

• Introduction
  • COVENANTS TO NOT COMPETE ARE ENFORCEABLE
  • These are written documents[1]
  • In the absence of a covenant to not compete, sellers and former employees are allowed to compete with buyers and/or employers[2]
  • Covenants to not compete prohibit unfair competition by restricting competitive activities for a period of time
  • Payment for entering into the covenant to not to compete
    • We normally recommend that something specific and reasonable be paid by the party benefited by the covenant to the other party.
      • This avoids claims that the other party did not know that they were contracting for something of value (i.e. they didn’t know the importance of what they were signing)
      • This limits claims that there was no consideration for the covenant to not compete
    • It has become the standard practice to incorporate a covenants to not compete in the purchase of a business, with a negotiated amount of the proceeds to be allocated to the covenant. This can have tax ramifications for both parties.
    • For covenants to not compete with employees
      • Continued employment is legally sufficient consideration to enforce a covenant to not compete[3]
      • Employers are not REQUIRED to pay an employee to enter into the agreement
      • In the absence of an employment contract or other impermissible basis for firing, refusal to sign a covenant to not compete is not a wrongful termination
      • An employee may quit rather than sign a covenant to not compete
      • The fact that the benefitted party will not accede to the requests of the other party (i.e. “take it or leave it”) does not mean that the covenant is unenforceable[4]
• Standard of review
  • THESE ARE HIGHLY FACT SPECIFIC CASES
  • Greater restraints are allowed for covenants to not compete entered into in conjunction with business sales than covenants to not compete in conjunction with employment[5]
  • Balancing of interests- a “reasonableness” test [6]
    • The restriction must be reasonably necessary to protect the party whom is benefitted
    • The restriction must NOT be unreasonable or excessively [oppressively] restrictive to the party who is restricted
    • The determination of reasonableness is viewed at the time the covenant not to compete is MADE. If the covenant is reasonable at its making, it is reasonable throughout its term[7]
  • Considerations in striking the balance between competing parties’ interests[8]
    • Time, area, and scope of restriction
    • Whether there was sufficient contact and relationships with customers so that “pirating” could take place
    • Whether the breech was the result of application of training or acquisition of specialized knowledge during the prior relationship
    • Whether enforcing the covenant would unnecessarily interfere with allowing the pursuit of employment
    • Whether one party’s gain from enforcing the contract was disproportionate to the harm to the other party.

• Judicial Reformation[9]
  • Enforcement of a covenant to not compete is not “all or nothing”
  • If the Court determines that the covenant is unenforceable as written, the court will determine what terms are reasonably necessary to protect the legitimate interests of the benefited party without causing undue hardship on the burdened party.
  • A covenant which is deliberately unreasonable and oppressive may be entirely unenforceable and ineligible for judicial reformation
    • Cases reviewed for this article did not provide much guidance on how much business or how often business is done for a described territory to be appropriate
    • This will probably depend on the damage to the protected party occurring from activities within the protected territory
    • If activities are occasional or non-recurring the territory may not be recognized by the court
    • The internet in general, and E-commerce in particular have impacted geographical descriptions of territories.
• Proof
  • Burden of proving the necessity and reasonableness of the covenant to not compete is on party seeking to enforce covenant[10]
  • To prevail, the party seeking to enforce the covenant must also show[11]
    • The covenant was actually breeched
    • The breech resulted in some damages to the party seeking enforcement
  • Remedies for breach of covenant[12]
    • Injunctions
    • Damages
  • WORDS MATTER
    • It is important to clearly and properly describe the “prohibited activity”
      • If there is a restriction on involvement[13] with a competing company it is important to describe the business of the PROTECTED party
      • If there is a prohibition of engaging in certain activities on behalf of others, the prohibition must be definite enough for enforcement, yet broad enough to provide adequate protection
      • When assisting clients with covenants to not compete, we often focus on protecting their existing customer/client base
  • It is important to clearly and properly describe the “prohibited territory”. The protected party should actually conduct business in the protected territory[14]

 

Contact the Kreamer Law Firm, P.C. at 515-727-0900 or at info@kreamerlaw.com If you/your business need assistance regarding covenants to not compete.

[1] All the cases reviewed were based on written documents. There were no cases found based on oral agreements to no compete.

[2] Covenants to not compete are an exception to laws prohibiting restraint of trade Mutual Loan Co. v. Pierce 245 Iowa 1051; 65 NW2d 405

[3] Iowa Glass Depot, Inc. v. Jindrich 338 NW 2d 376, 381 (Iowa 1983)

[4] Sutton v. Iowa Trenchless, L.C. 808 NW2d 744 (Iowa 2011)

[5] Baker v. Starkey 259 Iowa 480, 491, 144 NW2d 889,895 (1966); see also Sutton v. Iowa Trenchless, L.C. 808 NW2d 744 (Iowa 2011)

[6] Lamp v. American Prosthetics, in. 379 NW 2d 909, 910 (Iowa 1986); see also Haggin v. Derby, 209 Iowa 939, 943, 229 NW 257, 259 (1930), Iowa Glass Depot, Inc. v. Jindrich 338 NW 2d 376,381 (Iowa 1983). Although mentioned in the cases, there is a third consideration: Whether there is some interest of the public which would be negatively impacted if the covenant was enforce. However, it is hard to see how this third consideration would be a primary concern.

[7] Sutton v. Iowa Trenchless, L.C. 808 NW2d 744 (Iowa 2011)

[8] Iowa Glass Depot, Inc. v. Jindrich 338 NW 2d 376 (Iowa 1983)

[9] Ehlers v. Iowa Warehouse Co. 188 NW2d 368 (Iowa 1971)

[10] Mutual Loan Co. v. Pierce 245 Iowa 1051, 1056; 65 NW2d 405,408

[11] Sutton v. Iowa Trenchless, L.C. 808 NW2d 744 (Iowa 2011). Arguably, a covenant to not compete is a contract between the parties. As such, because damages are an element to be proven in a breech of contract case, damages would be necessary in order to prevail in a non-compete case.

[12] Party seeking enforcement has burden to prove breech, and that there is/will be harm to it due to breech

[13] Either employment restrictions or ownership restrictions

[14] Ehlers v. Iowa Warehouse Co. 188 NW2d 368 (Iowa 1971); see also Sutton v. Iowa Trenchless, L.C. 808 NW2d 744 (Iowa 2011) and the cases cited therein

 

When families of business owners get together, whether for holidays or family celebrations, sometimes discussions turn to the future ownership of the business. This blog will look at various considerations important to the transfer of a family business within the family.

1. Overriding considerations in making a transfer
   • Transfer of management is different than transfer of ownership
   • Intent/reason for transfer
     • Transferor considerations
       1. Illness
       2. Retirement
     • Transferee considerations
       1. Desire to operate business
       2. Desire to grow business
   • Commitment
     • To the concept of transfer- a true intention to make a transfer
     • To the process of transfer- a true intention to follow through with the steps of making a transfer
   • VALUE of the business
     • Should be obtained from an appraiser or business broker
     • Fair market value is NOT the same as “book value”
     • CRITICAL in interfamily transfers
       1. Tax attributes of sale are normally based on fair market value
       2. By using an independent valuation family harmony is promoted
   •  Communication
     • With the transferee
       1. In both act and writing
       2. In documentation
          • Minutes
          • Agreements
     • With the other employees-in both act and writing
     • With vendors/customers-in act
   • Preparation for transfer-mentoring is key

2. Considerations in making lifetime transfers
   • For payment (Buy/Sell Agreements or Purchase Agreements)
     • Purchasing can “equalize” an estate
     • Terms of purchase
       1. Price
       2. Terms of payment
     • Can “fund” retirement
     • Creates an income taxable event for Seller
   • Drawbacks to sales to family members
     • A “bargain sale” (sale at lower than fair market value) may be disregarded for Estate tax purposes[1]
     • Sale at price OTHER THAN independently determined fair market value can create family “disharmony”
       1. Purchaser feels they are re-purchasing their own efforts
       2. Purchaser feels they are overpaying to fund the retirement of the Seller
       3. Non-Purchasers feel that Purchaser is getting a “bargain” even if they are not
   • By gift
     • If recipient is at a lower tax bracket then transferee, can result in reduction of overall income tax to family
     • Can reduce taxable estate of donor
       1. Estate tax starts at $5.45 Million
       2. Annual gift exclusion is still $14,000
       3. Gifts of business interests can be discounted so that $14,000 of “value” can transfer more than a proportionate share of the business
     • Can create a tax problem for recipient because the recipient’s “basis” for tax purposes is the same as the tax basis of the donor[2]
   • Lifetime transfers can be a combination of gift and sale

3. Consideration in making post-mortem transfers
   • Income tax implications
     • Due to the step-up in basis to fair market value at the date of death[3] the Estate normally has no income tax as the result of the sale
     • The recipient of a business from an Estate takes the Estate’s basis[4]. Accordingly, if the recipient sells the business there may be less income tax due on the sale than if there is a lifetime gift of the business.
   • For payment
     • Will can establish an “option” to a family member to “buy out” the interests of others
     • Buy/Sell agreement could be established during lifetime to take effect at death
     • Due to the step-up in basis to fair market value at the date of death[5] the Estate normally has no income tax as the result of the sale
   • By bequest
     • Equal is not always fair and fair is not always equal
     • Non-participant beneficiaries of a business often become “experts” to the dismay of the participant beneficiaries
     • We recommend bequest of the business to a participating beneficiary, but some corresponding bequest to a non-participating beneficiary (such as life insurance)

At the Kreamer Law Firm, P.C. we focus our practice on business law as well as estate planning/probate. Contact us at 515-727-0900 or at info.kreamerlaw.com for assistance with transferring your business to family members.

[1] IRC §2703

[2] IRC §1015

[3] IRC §1014

[4] IRC §1014

[5] IRC §1014

Just because someone may not hold a majority interest in a corporation does NOT mean they are without rights with regards to the operation of the company.

1. General rules of governance
   • All management is vested in directors[1]
     • Directors are elected by shareholders[2]
       1. Unless there is a provision in the articles of incorporation directors are elected one at a time
       2. Unless there are provisions in the articles of incorporation or bylaws to the contrary, directors are elected by majority vote.
     • The number of directors[3]
       1. Must be at least one
       2. Established in Articles of Incorporation or bylaws
       3. Can be changed by vote of Shareholders[4]
       4. Unless there are special provisions in the Articles of Incorporation or Bylaws each share get one vote[5]
     • Directors can be removed by majority vote of shareholders with, or without cause[6]
       
   • Directors appoint and/or remove officers[7]
   • Because they are charged with operation of the company[8], directors (or the officers to whom they delegate such authority) hire, fire and determine salaries for employees.
   • Unless otherwise specified in the Articles of Bylaws:
     • Action can be taken by the Board if a majority of the Board is present[9]
     • The Board acts by majority vote of those present[10] (NOTE: a quorum must be present for action to be taken)
   • By virtue of control of the election/removal of directors, who are charged with company operations, majority shareholders control the operation of the company.

2. ALL shareholders have the right to access, inspect, and copy business records of the corporation[11]
   • These records include minutes of meetings
   • These records include financial and accounting records
3. Opportunities for abuse of minority shareholders
   • Operational issues
     • Excessive salaries/benefits
     • Withholding distributions (dividends)
     • Self-dealing
   • Sale of the company’s assets or a dispositive merger[12]

4. Protections for minority shareholders
   • Operational issues
     • Directors and officers duty to the corporation and ALL shareholders[13]
       1. Actions must be in good faith
       2. Actions must be, in reasonable belief of the director/officer to be in the best interests of the corporation
       3. There has to be a reasonable basis for decisions being made[14]
     • Minority shareholders can sue for damages or injunctive relief if directors or officers fail to meet this level of care[15]
   • Sale or dispositive merger
     • A corporation cannot sell or otherwise dispose of substantially all of its assets (other than in the normal course of business) without a vote of BOTH the directors AND the shareholders[16]
     • Unless ALL of the directors[17] AND at least 90{7643a07be85def2dedbecc56bad3bab67e83a7c22b809f3c7a47a1fa73b8911c} of the shares eligible to vote[18] are in favor of the transaction, and sign minutes to that effect, there must a physical meeting of directors and shareholders to discuss the transaction.
     • Shareholders who vote against the sale or dispositive merger have the right to have their shares purchased by the corporation at “fair value”[19] and if necessary can get their legal fees paid by the corporation[20].
   • SAMSON Option-dissolution of the business
     • A court can order the dissolution of the corporation if it finds[21]:
       1. The directors are deadlocked in the management of the corporate affairs, the shareholders are unable to break and the deadlock is injurious to corporate business affairs.
       2. The directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent.
       3. The corporate assets are being misapplied or wasted.
     • A dissolved corporation cannot carry on ANY business EXCEPT as appropriate to liquidate its business assets and activities[22]
       1. After payment of all creditors, assets are distributed to shareholders (pro-rata)[23].
       2. NOTE: some assets (like intellectual property) may have to be valued and distributed “in-kind” to shareholders.
     • In lieu of a judicial dissolution, the remaining shareholders can purchase the complaining shareholder’s shares at “fair value”[24]

Contact the Kreamer Law firm, P.C. at 515-727-0900 or info@kreamerlaw.com if you need assistance in dealing with shareholders of your company.  

 

[1] Iowa Code 490.801(2)

[2] Iowa Code 490.803(3) Unless there is a provision in the articles of incorporation, directors

[3] Iowa Code 490.803(1) and (2)(a)

[4] Iowa Code 490.803(2)(a)

[5] Iowa Code 490.721(1)

[6] Iowa Code 490.808(1)

[7] Iowa Code 490.840(1) and 490.843(2)

[8] Iowa Code 490.801(2)

[9] Iowa Code 490.824(1)(a)

[10] Iowa Code 490.824(3) Accordingly, each member of the board has an equal vote.

[11] Iowa Code 490.1602(1)

[12] Abuse could be selling on terms which wind up benefitting the majority shareholders; or refusing to sell on terms which could benefit minority shareholders. A dispositive merger is where the company owned does not survive.

[13] Iowa Code 490.830(1) and Iowa Code 490.84.(1)

[14] Directors and officers have a duty to make decisions with the care that a person in a like position would reasonably believe to be appropriate. See Iowa Code 490.830(2), 490.831, and 490.832(3). This confers some responsibility to investigate the factual basis for the decisions being made.

[15] Iowa code 490.831, and 490.842(3).

[16] Iowa Code 4901202

[17] Iowa Code 490.821(1)

[18] Iowa Code 490.704(1)

[19] Iowa Code 490.1301 et. seq.

[20] Iowa Code 490.1331

[21] Iowa Code 490.1430(2)

[22] Iowa Code 490.1405(1)

[23] Iowa Code 490.1405(1)

[24] Iowa Code 490.1434